Corporate Bonds: Why Higher Interest Rates Are Not the Whole Story.

Rising interest rates are usually seen as bad news for bonds. However, the current market environment suggests that corporate bonds may not necessarily repeat the sharp losses seen during the 2022 rate-hiking cycle.

In 2022, when the Federal Reserve aggressively raised interest rates, highly rated U.S. corporate bonds suffered losses of around 15%. This time, however, companies have had more time to adjust to higher borrowing costs, while the U.S. economy remains relatively resilient. At the same time, lower bond issuance by large technology companies could reduce the supply of corporate debt and provide some support for the market.

What Does This Mean for Greece?

The issue is also relevant for Greek investors. Greek corporate bonds are influenced by borrowing costs across the eurozone and international markets. The Bank of Greece notes that yields on Greek corporate bonds have broadly followed the direction of European corporate bond yields.

Greek non-financial companies raised around €3.7 billion through bond issuance in 2025, compared with €2.1 billion in 2024. However, new corporate bond issuance was more limited in the first months of 2026, partly because refinancing needs were lower and secondary-market yields were higher.

For Greek investors, the key message is not that corporate bonds are automatically “safe” or that they should be bought. Higher interest rates can push existing bond prices lower, but other factors also matter, including the financial health of the issuing company, its credit quality, the bond's maturity and the yield it offers.

In simple terms: higher interest rates can put pressure on bond prices, but a healthy economy and financially stronger companies can provide an important counterbalance.

For Greece, the development of the corporate bond market is particularly important because it gives companies another source of financing beyond traditional bank lending.